Parsons* Third quarter 2022 earnings press release

Parsons Reports Record Results Since IPO for the Fourth Quarter and Fiscal Year 2024

Fourth Quarter Financial Highlights

Record Fiscal Year 2024 Highlights

Chantilly, VA – February 19, 2025, Parsons Corporation (NYSE: PSN) today announced financial results for the fourth quarter and fiscal year ended December 31, 2024.

CEO Commentary

“2024 was another exceptional year for Parsons. We achieved record results for total revenue, adjusted EBITDA, adjusted EBITDA margin, operating cash flow, contract win rates, and contract awards. We are delivering consistent results as we reported double-digit organic revenue growth every quarter for the last two years,” said Carey Smith, chair, president, and chief executive officer. "We also achieved organic revenue growth of more than 20% and adjusted EBITDA growth of more than 30% for the second consecutive year, demonstrating our commitment to efficiently managing the business and drive margin expansion.

Our balanced portfolio and our team’s strong execution in our six large and growing end-markets is enabling us to take advantage of unprecedented global infrastructure spending and a purpose-built federal portfolio ready to counter near peer threats. As a Company serving both commercial and government customers, we understand the imperative to move with speed and agility to expeditiously solve our customers’ most pressing and complex challenges. Looking forward, I am very excited about our prospects and ability to continue to deliver mid- single-digit or better organic revenue growth. We have the right portfolio, in the right markets, and the right team to continue to drive shareholder value.”

Fourth Quarter 2024 Results

Year-over-Year Comparisons (Q4 2024 vs. Q4 2023)

Total revenue for the fourth quarter of 2024 increased by $240 million, or 16%, to $1.7 billion. This increase was driven by organic growth of 14% and contributions from acquisitions. Organic growth was primarily driven by strong growth in the company's critical infrastructure protection and cyber markets. Operating income increased 29% to $100 million primarily due to organic growth including the ramp-up of recent contract wins and growth on existing contracts. Net income increased 21% to $54 million. GAAP diluted earnings per share (EPS) attributable to Parsons was $0.49 in the fourth quarter of 2024, compared to $0.39 in the prior year period.

Adjusted EBITDA including noncontrolling interests for the fourth quarter of 2024 was $147 million, a 14% increase over the prior year period. The adjusted EBITDA increase was driven primarily by the ramp-up of recent contract wins and growth on existing contracts, with effective cost control. Adjusted EBITDA margin was 8.5% in the fourth quarter of 2024, compared to 8.6% in the fourth quarter of 2023. Adjusted EBITDA growth for the quarter was negatively impacted by $29 million of adjustments on two programs. A normalized margin excluding these adjustments would have been 10.0% in the fourth quarter of 2024. Adjusted EPS was $0.78 in the fourth quarter of 2024, compared to $0.69 in the fourth quarter of 2023.

Fiscal Year 2024 Results

Fiscal Year Comparison (fiscal year 2024 vs. fiscal year 2023)

Total revenue for the the year ended December 31, 2024 increased by $1.3 billion, or 24%, to $6.8 billion. This increase was driven by organic growth of 22% and contributions from acquisitions. Organic growth was driven by the ramp-up of recent contract wins and growth on existing contracts. Operating income increased 48% to $428 million million primarily due to increased volume on new and existing contracts, while continuing to closely monitor and manage costs. Net income increased to $235 million. Diluted earnings per share (EPS) attributable to Parsons was $2.12, compared to $1.42 in the prior year period.

Adjusted EBITDA including noncontrolling interests for the the year ended December 31, 2024 was $605 million, a 30% increase over the prior year period. Adjusted EBITDA margin was 9.0% for the the year ended December 31, 2024, compared to 8.5% in the prior year period. Adjusted diluted EPS was $3.26 for the the year ended December 31, 2024, compared to $2.43 for the year ended December 31, 2023. The year-over-year adjusted EBITDA and adjusted EPS increases were driven by growth on accretive contracts, contributions from acquisitions, and continuing to effectively manage costs.

Segment Results

Federal Solutions Segment

Federal Solutions Quarter-over-Quarter Comparisons (Q4 2024 vs. Q4 2023)

Fourth quarter 2024 Federal Solutions revenue increased by $160 million, or 19%, to $1.0 billion. This increase was driven by organic growth of 17% and the contribution from the company's BlackSignal acquisition. Organic growth was driven primarily by the ramp-up of recent contract wins and growth on existing contracts.

Federal Solutions adjusted EBITDA including noncontrolling interests increased by $17 million, or 21%, to $100 million. Adjusted EBITDA margin increased 20 basis points to 10.0%. These increases were driven primarily by higher volume and improved mix, with effective indirect cost controls.

Federal Solutions Fiscal Year Comparison (fiscal year 2024 vs. fiscal year 2023)

Federal Solutions revenue for the year ended December 31, 2024 increased $986 million, or 33%, to $4.0 billion. This increase was driven by organic growth of 30% and contributions from the company's SealingTech and BlackSignal acquisitions. Organic growth was driven by the strong growth in the company's critical infrastructure protection and cyber markets.

Federal Solutions adjusted EBITDA including noncontrolling interests for the year ended December 31, 2024 increased by $126 million, or 43%, to $415 million. Adjusted EBITDA margin increased 80 basis points from 9.6% to 10.4%. These increases were driven primarily by increased volume on accretive contracts, and contributions from high-margin acquisitions.

Critical Infrastructure Segment

Critical Infrastructure Quarter-over-Quarter Comparisons (Q4 2024 vs. Q4 2023)

Fourth quarter 2024 Critical Infrastructure revenue increased by $80 million, or 12%, to $731 million. This increase was driven by organic growth of 9% and the inorganic revenue contributions from the company's BCC and I.S. Engineers acquisitions. Organic growth was driven by higher volume as a result of new awards in both the company's Middle East and North America infrastructure markets.

Critical Infrastructure adjusted EBITDA including noncontrolling interests increased by $1 million, or 2%, to $47 million from the fourth quarter of 2023. Adjusted EBITDA margin decreased to 60 basis points to 6.4%. The adjusted EBITDA margin decrease was impacted by the $29 million of adjustments previously discussed, partially offset by profits from accretive organic growth on both new and existing contracts.

Critical Infrastructure Fiscal Year Comparison (fiscal year 2024 vs. fiscal year 2023)

Critical Infrastructure revenue for the year ended December 31, 2024 increased by $321 million or 13%, to $2.7 billion almost all of which was organic. Organic growth was driven by expansion in both the Middle East and North America.

Critical Infrastructure adjusted EBITDA including noncontrolling interests for the year ended December 31, 2024 increased by $14 million, or 8%, to $189 million. The adjusted EBITDA increase was driven primarily by organic growth and operating leverage. Adjusted EBITDA margin decreased 30 basis points to 6.9%. The lower margin for the year was the result of adjustments on the two programs previously discussed. Excluding these impacts, Critical Infrastructure margins were 10.1% for the full year.

Fourth Quarter and Fiscal Year 2024 Key Performance Indicators

Significant Contract Wins

Parsons continues to win new business across both segments and all six end markets. During the fourth quarter of 2024, the company won six single-award contracts worth more than $100 million each, bringing Parsons total to 15 contract wins worth more than $100 million for the full year, matching the company's record in 2023. After the fourth quarter of 2024 ended, the company won two additional contracts worth more than $100 million each.

Additional Corporate Highlights

During the quarter, the company announced and closed a strategic acquisition and was named one of America’s most trusted companies by Forbes. These awards complement other recognitions the company received during 2024 including being named as one of the World’s Most Ethical Companies by Ethisphere for the 15th consecutive year and recognized as one of the best employers for new grads by Forbes.

Fiscal Year 2025 Guidance

The table below summarizes the company's fiscal year 2025 guidance.

Net income guidance is not presented as the company believes volatility associated with interest, taxes, depreciation, amortization and other matters affecting net income, including but not limited to one-time and nonrecurring events and the impact of M&A, will preclude the company from providing, with reasonable certainty, net income guidance for fiscal year 2025.

Reiterating Long-term Growth Targets

The table below summarizes the company's long-term growth targets.

Conference Call Information

Parsons will host a conference call today, February 19, 2025, at 8:00 a.m. ET to discuss the financial results for its fourth quarter and fiscal year 2024.

Access to a webcast of the live conference call can be obtained through the Investor Relations section of the company's website (https://investors.parsons.com). Those parties interested in participating via telephone may register on the Investor Relations website or by clicking here.

A replay will be available on the company's website approximately two hours after the conference call and continuing for one year.

About Parsons Corporation

Parsons (NYSE: PSN) is a leading disruptive technology provider in the national security and global infrastructure markets, with capabilities across cyber and intelligence, space and missile defense, transportation, environmental remediation, urban development, and critical infrastructure protection. Please visit Parsons.com and follow us on LinkedIn and Facebook to learn how we’re making an impact.

Forward-Looking Statements

This Earnings Release and materials included therewith contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are based on our current expectations, beliefs, and assumptions, and are not guarantees of future performance. Forward-looking statements are inherently subject to uncertainties, risks, changes in circumstances, trends and factors that are difficult to predict, many of which are outside of our control. Accordingly, actual performance, results and events may vary materially from those indicated in the forward-looking statements, and you should not rely on the forward-looking statements as predictions of future performance, results or events. Numerous factors could cause actual future performance, results and events to differ materially from those indicated in the forward-looking statements, including, among others: the impact of COVID-19; any issue that compromises our relationships with the U.S. federal government or its agencies or other state, local or foreign governments or agencies; any issues that damage our professional reputation; changes in governmental priorities that shift expenditures away from agencies or programs that we support; our dependence on long-term government contracts, which are subject to the government’s budgetary approval process; the size of addressable markets and the amount of government spending on private contractors; failure by us or our employees to obtain and maintain necessary security clearances or certifications; failure to comply with numerous laws and regulations; changes in government procurement, contract or other practices or the adoption by governments of new laws, rules, regulations and programs in a manner adverse to us; the termination or nonrenewal of our government contracts, particularly our contracts with the U.S. government; our ability to compete effectively in the competitive bidding process and delays, contract terminations or cancellations caused by competitors’ protests of major contract awards received by us; our ability to generate revenue under certain of our contracts; any inability to attract, train or retain employees with the requisite skills, experience and security clearances; the loss of members of senior management or failure to develop new leaders; misconduct or other improper activities from our employees or subcontractors; our ability to realize the full value of our backlog and the timing of our receipt of revenue under contracts included in backlog; changes in the mix of our contracts and our ability to accurately estimate or otherwise recover expenses, time and resources for our contracts; changes in estimates used in recognizing revenue; internal system or service failures and security breaches; and inherent uncertainties and potential adverse developments in legal proceedings including litigation, audits, reviews and investigations, which may result in material adverse judgments, settlements or other unfavorable outcomes. These factors are not exhaustive and additional factors could adversely affect our business and financial performance. For a discussion of additional factors that could materially adversely affect our business and financial performance, see the factors including under the caption “Risk Factors” in our Annual Report with the Securities and Exchange Commission pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended December 31, 2024, on Form 10-K, filed on February 19, 2025, and our other filings with the Securities and Exchange Commission.

All forward-looking statements are based on currently available information and speak only as of the date on which they are made. We assume no obligation to update any forward-looking statements made in this presentation that becomes untrue because of subsequent events, new information or otherwise, except to the extent we are required to do so in connection with our ongoing requirements under federal securities laws.

PARSONS CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Quarterly Data Unaudited)

Weighted average number shares used to compute basic and diluted EPS

(In thousands) (Quarterly Data Unaudited)

Net income available to shareholders used to compute diluted EPS as a result of adopting the if-converted method in connection with the Convertible Senior Notes

(In thousands) (Quarterly Data Unaudited)

PARSONS CORPORATION

CONSOLIDATED BALANCE SHEETS

(In thousands, except share information)

PARSONS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

Contract Awards

(in thousands)

Backlog

(in thousands)

Book-To-Bill Ratio1:

Non-GAAP Financial Information

The tables under "Parsons Corporation Inc. Reconciliation of Non-GAAP Measures" present Adjusted Net Income attributable to Parsons Corporation, Adjusted Earnings per Share, Earnings before Interest, Taxes, Depreciation, and Amortization (“EBITDA”), Adjusted EBITDA, EBITDA Margin, and Adjusted EBITDA Margin, reconciled to their most directly comparable GAAP measure. These financial measures are calculated and presented on the basis of methodologies other than in accordance with U.S. generally accepted accounting principles ("Non-GAAP Measures"). Parsons has provided these Non-GAAP Measures to adjust for, among other things, the impact of amortization expenses related to our acquisitions, costs associated with a loss or gain on the disposal or sale of property, plant and equipment, restructuring and related expenses, costs associated with mergers and acquisitions, software implementation costs, legal and settlement costs, and other costs considered non-operational in nature. These items have been Adjusted because they are not considered core to the company’s business or otherwise not considered operational or because these charges are non-cash or non-recurring. The company presents these Non-GAAP Measures because management believes that they are meaningful to understanding Parsons’s performance during the periods presented and the company’s ongoing business. Non-GAAP Measures are not prepared in accordance with GAAP and therefore are not necessarily comparable to similarly titled metrics or the financial results of other companies. These Non-GAAP Measures should be considered a supplement to, not a substitute for, or superior to, the corresponding financial measures calculated in accordance with GAAP.

1 Book-to-Bill ratio is calculated as total contract awards divided by total revenue for the period.

PARSONS CORPORATION

Non-GAAP Financial Information

Reconciliation of Net Income to Adjusted EBITDA

(in thousands)

PARSONS CORPORATION

Non-GAAP Financial Information

Computation of Adjusted EBITDA Attributable to Noncontrolling Interests

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PARSONS CORPORATION

Non-GAAP Financial Information

Reconciliation of Net Income Attributable to Parsons Corporation to Adjusted Net Income Attributable to Parsons Corporation

(in thousands, except per share information)

PARSONS CORPORATION

CONSOLIDATED STATEMENT OF OPERATIONS

Adoption Of Accounting Standards Update 2024-04

(In thousands, except per share data)

(Unaudited)

1 Presents the revised consolidated statement of operations resulting from the adoption of Accounting Standards Update (“ASU”) 2024-04 as of January 1, 2024 on a prospective basis. As a result of the adoption of ASU 2024-04, the Company reversed a loss on extinguishment of debt for the partial repurchase of the Convertible Senior Notes due 2025 and recorded the repurchase transaction as an induced conversion. This change from extinguishment to inducement accounting resulted in the Company (i.) reversing the $211.0 million loss and the related $49.9 million tax benefit on extinguishment of debt, recorded in Q1 2024, (ii.) recording a $18.4 million convertible debt repurchase loss, (iii.) the difference between the extinguishment loss and inducement expense of $192.6 million recorded to equity, and (iv.) the related tax benefit of $45.6 million recorded to equity. See "Note 2—Summary of Significant Accounting Polices—New Accounting Pronouncements" of the Company's Form 10-K for the year ended December 31, 2024 for a further discussion of the first quarter 2024 extinguishment accounting and subsequent change to inducement accounting.

2 Diluted earnings per share prior to the adoption of ASU 2024-04 did not include certain adjustments as their inclusion would have been antidilutive. Subsequent to the adoption of ASU 2024-04 these adjustments are no longer antidilutive. Dilutive adjustments include if converted interest of $2.8 million, 1.5 million shares related to stock based awards and 6.8 million shares related to convertible senior notes. Inclusion of these dilution adjustments resulted in dilutive net income attributable to Parsons Corporation of $42.5 million and total diluted shares of 114.4 million for the quarter ended March 31, 2024.

No other quarters were impacted by the adoption of ASU 2024-04.